EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0817644
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Ikea Pty Ltd applied for a TCO in respect of certain wall mounted smoothing iron holders on 14 July 2008.
Instrument
TCO No 0817644 was made on 03 October 2008. It declares that those certain wall mounted smoothing iron holders are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is free.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0817644 is taken to have come into force on 14 July 2008.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Tariff Concession Instrument No. 0817644, enacted in 2008, is a legislative measure under the Customs Act 1901, aimed at facilitating tariff concessions for specific goods. This instrument was introduced to address the need for the Chief Executive Officer of Customs to have the authority to grant tariff concessions for goods, provided that certain criteria are met, and no substitutable goods are produced in Australia. The instrument was created in response to an application by Ikea Pty Ltd for a tariff concession on certain wall mounted smoothing iron holders, and it came into effect on 14 July 2008. The policy objective of this legislation is to allow for the concession of tariffs on goods that are not produced domestically, thereby benefiting importers by potentially reducing their duty costs and providing a competitive edge for these imported goods.
The Tariff Concession Instrument No. 0817644 was enacted by the relevant legislature to provide a mechanism for tariff concessions on imported goods, ensuring that the rights of the Commonwealth and importers are not adversely affected. The process involves an application being submitted to the CEO, who must then determine whether the application meets the core criteria specified in the Customs Act 1901. In the case of Ikea Pty Ltd's application, the CEO was satisfied that the wall mounted smoothing iron holders qualified for a tariff concession, resulting in the issuance of TCO No. 0817644. This instrument effectively reduces the duty rate from 5% to free, enhancing the competitive position of the imported goods in the Australian market.
Scope and Application
The Customs Act 1901, specifically Part XVA, facilitates the issuance of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs, granting lower rates of customs duty on specified goods. This mechanism is available to any person who meets the criteria set forth in the Act, such as the absence of substitutable goods being produced in Australia at the time of application. The process involves the applicant submitting a TCO application to the CEO, who then determines whether the application aligns with the core criteria, primarily by ensuring no substitutable goods are produced domestically in the ordinary course of business. Once these criteria are satisfied, the CEO issues a TCO, thereby applying a prescribed lower duty rate to the goods in question. This arrangement is designed to benefit importers by potentially reducing their duty payments on specified goods.
Geographically, the application of the Tariff Concession Instrument No. 0817644 extends to all imported goods covered by the TCO within Australia, affecting entities involved in the importation of these goods. Notably, the Act ensures that the TCO does not disadvantage or impose liabilities on any person other than the Commonwealth, particularly concerning actions taken before the TCO's effective date. The instrument does not specify any exclusions beyond the goods that cannot be subject to a TCO as per section 269SJ of the Act. Additionally, the TCO's application is not restricted by any state or territory boundaries, thereby maintaining a uniform approach across Australia.
Key Provisions
The key provisions of Tariff Concession Instrument No. 0817644, made under the Customs Act 1901, pertain to the application and implementation of Tariff Concession Orders (TCOs). Specifically, sections 269C and 269P of the Act outline the process by which an applicant, such as Ikea Pty Ltd in this case, can apply for a TCO for certain goods, in this instance, wall mounted smoothing iron holders. If the Chief Executive Officer of Customs (CEO) is satisfied that the application meets the core criteria, which includes ensuring that no substitutable goods are produced in Australia (as per section 269C), the CEO must issue a written order declaring that the specified goods are subject to a lower rate of customs duty (section 269P(3)). In this case, the CEO issued TCO No. 0817644 on 3 October 2008, declaring that the specified goods are subject to item 50 of Schedule 4 to the Customs Tariff Act 1995, resulting in a duty-free rate.
The obligations imposed on the parties governed by the Act include ensuring that the application for a TCO is made in accordance with the legislative criteria, and that the CEO is notified of any potential reasons why the concession should not be granted. As per section 269K(1), the CEO must publish a notice in the Gazette inviting submissions from interested parties. In this instance, no submissions were received, leading to the issuance of the TCO. Additionally, the Act mandates that the rights of persons other than the Commonwealth are not adversely affected by the TCO, and that the TCO does not impose liabilities for actions taken prior to its registration (subsection 269S(1)).
The consequences for breach of the Act or non-compliance with the terms of a TCO are not explicitly detailed in the provided text. However, it is important to note that the Customs Act 1901 and associated regulations contain provisions for offences and penalties related to customs and excise matters. Typically, breaches of the Customs Act can result in civil penalties, including fines, or criminal penalties, including imprisonment, depending on the severity and intent of the breach. The specific penalties are outlined in other sections of the Act and associated regulations, and would apply as per the general provisions of the Customs Act for non-compliance with its requirements.